The Fizz! Blog

HMRC's fuel-only mileage rates change at the weekend

Taxman-approved fuel-only mileage rates change on the 1sr December.  They're almost all down a bit.  Has fuel got cheaper of late?  I hadn't noticed.  Anyway, these are the rates that HMRC are happy for employers to use a) to reimburse staff for fuel used for company business that they've paid for and put in company cars, or b) reclaim from staff the cost of company fuel they've used for their own private motoring.  But they're also the rates that businesses can use to reclaim VAT on some of the mileage allowances paid to employees and directors.

Employers can pay a mileage allowance of up to 45p a mile, tax-free, when employees use their own car for business.  That hasn't changed, it remains 45p.

You can’t reclaim VAT on all of the 45p, but you can reclaim VAT on the part that represents fuel, as long as you retain VAT receipts covering the cost.  As fuel costs have increased so sharply, the approved rates - the part of the 45p that the taxman is happy to accept as representing the cost of fuel - have just been increased once more.  The new list of rates is here:

http://www.hmrc.gov.uk/cars/advisory_fuel_current.htm

If you're VAT registered, not on the flat-rate scheme, and failing to reclaim VAT on your mileage costs at all, you should start.  You can even reclaim some of the VAT you've missed out on in the past - get in touch with us to find out how.

www.fizzhq.com

A QuickBooks tip - monitoring your sources of income

There's a field on QuickBooks where you can record the Sales Rep associated with each customer you have.  Almost all businesses ignore this because they don't have Sales Reps.

You don't have to use the field for that, though.  It might saqy Sales Rep, but you can use it for anything.  We use it to record the marketing source of each new client we take on, based on a list of 15 or so sources.  That makes it really easy to see where our income is coming from, by reporting on "Turnover by Sales Rep".  Then we can put more or less effort into particular activities.  Plus it's just interesting.  You could use it for that - or there could be some other way that being able to slice up your income and report on it would be useful.

www.fizzhq.com

How much does your car really cost you?

I'm often gently mocked in the office for keeping a close eye on my personal finances - I monitor them using the full-blown accounts package QuickBooks.  It's a habit I started when I was a trainee with next to no money, permanently in danger of a £20 unauthorised overdraft fee, and even if I'm pushing the limit a bit less now I still find it enormously helpful to be able to see how much I'm spending and saving, for the sake of one or two minutes' work a day.  Amongst other things, it means I'm really clear on the cost of motoring to me.

For many people, their car is the second biggest cost in their life, after their home.  For some people, especially those who have an oldish smallish mortgage, it's actually the biggest.  But most people don't have any real idea of how much it actually costs them over its life.  Many people have some idea on the cost of fuel, but how about:

• Depreciation/leasing costs
• Servicing
• Road Tax
• Insurance

It's not unusual for those costs to add up to more than the cost of fuel - it's fairly typical to find that, when you look at it, fuel is costing 20p a mile in a typical car but those other costs add up to 25p plus - even for a car that's not brand-new.

It's a bit of a frustration when people say they can't afford to save or make pension contributions, when you know full well that they could, but have made a decision to allocate the resources to the shiny £499 a month piece of metal outside.  We're not knocking the choice to allocate resources to cars rather than anything else, it's a personal decision - but we do think it's a decision that's better made on an informed basis.

If you find that your car is costing you 65p a mile all-in, and you still think the practical and mental benefits to you are worth it and outweigh those of using the money in another way, that's completely cool.  But there are some people who just haven't looked at it with a clear enough head to realise the magnitude of the choice they're making.  Some of them just might make a different decision if they saw the truth in black and white.

It's not difficult to do calculations to work out the rough cost per mile of your car.  I've a really simple spreadsheet for doing it - if you're a client and would like a copy, drop me an email.  You might be surprised by the result!

www.fizzhq.com

A rebate of up to £2,000 for every employer from next year, and a decision for directors

From April next year, all employers are going to be given a £2,000 "Employment Allowance" - a discount against their Employer's National Insurance bill.  So any employer with a total Employer's NI bill of less than £2,000 a year (say, an employer with just one employee earning £20,000) will pay no NI at all.  An employer with a total bill greater than than will get the full £2,000 discount.

Employer's NI is a fairly perverse thing really - essentially it's a deterrent against employing people - so easing that burden a bit isn't something that anyone's going to complain about.

At present, many owner-directors of limited companies pay themselves a salary that results in no National Insurance (employee's or employer's) being payable.  From next April, it looks like it will be slightly more advantageous for many of them to pay a salary that triggers both of those varieties of NI, but take advantage of the discount on the Employer's part.  £160 per director could be saved that way.  Is £160 worth the hassle of deducting tax and NI and making the payments to HMRC on a periodic basis?  For some people it will be, but for some it won't.

More on the allowance here:

https://www.gov.uk/government/publications/national-insurance-2000-employment-allowance

www.fizzhq.com

New tax reliefs for creative industries (and why you probably can't claim them)

In the last budget, it was announced that some new tax reliefs would be introduced for creative industries.  Almost all of the details have now been finalised.  However, the reliefs are, broadly speaking, only going to be available to rather large companies creating very specific things.

There are three areas where reliefs can be claimed: TV, animation and video games.

The TV relief can only be claimed by the main producer of a "high-end" TV show - that means one that costs at least £1m an hour to produce.  There are then some other tests, where you have to build up points based upon the programme being culturally British/European, involving British/European writers/crew/actors and that kind of thing.  But, in any case, anyone who's just involved in the industry isn't going to be able to claim anything - you've got to be the programme maker.

The animation strand is a bit more generous, because the £1m/hour restriction is lifted.  However, the animation must be intended for broadcast, and there's still a requirement to build up points with similar tests to do with culture and content.  Those cultural tests will make it pretty hard to qualify.

Finally, the video game strand.  At first glance, it would seem this would be the most likely relief available to smaller businesses - small businesses release games for smartphones, say, all the time.  The sticking point, though, is that those cultural tests are once again in place.  Effectively, it's going to be character-driven games with a narrative and, most likely, a British/European setting that qualify.  In other words, very few.  As with the other two reliefs, the clear aim is to encourage the creators of big-budget productions to locate themselves in the UK.

There's a bit more detail here if you want to check it out:

http://www.hmrc.gov.uk/ct/forms-rates/claims/creative-industries.htm

Don't get your hopes up, though!

www.fizzhq.com